Resources Quarterly - WINTER 2013 - page 8

8 |
Raising Capital in the Energy Industry
through the OM Exemption
By TanyaWiltshire ,
NSSC Investor Education & Communications Coordinator
W
hen businesses raise
money through the is-
suance of securities, they are
subject to securities laws that
govern this process. Private
placement markets or “exempt”
markets are exactly that, a way
for businesses to be exempt
from some of these laws and still raise the funds
they need to grow.
An example of a market exemption commonly
used in the energy industry to raise capital is an
Offering Memorandum. A company can sell its
securities to anyone using the Offering Memoran-
dum (OM) exemption (this exemption is not avail-
able when raising money fromOntario investors).
An OM is a document that contains a description of
the company’s business, discloses annual financial
statements, lists the relevant risks, and describes
how the money raised will be used. The OMmust
be filed with the provincial securities regulator
where the securities are being sold.
Whether you are writing the OM to raise capital
or reading it as a potential investor, it’s important
to understand the contents of the document.
This will help to ensure both parties are com-
plying with securities laws and have the ability to
make an informed investment decision.
Here are the top five important things both par-
ties need to do and know before diving into the
OMmarket.
Top five things to know when writing an OM:
1. Explain your business in detail
2. Explain the level of risk for investors
3. Explain your forward thinking strategy
4. Disclose your financial statements to securi-
ties regulators
5. Seek 3rd party advice before submitting i.e.
talk to your accountant, or lawyer specializ-
ing in securities law.
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